107 | Wildfires, Verdicts, and Tariffs: Why Your HOA Insurance Costs Keep Going Up - HOA Insights: Common Sense for Common Areas

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Kevin Davis (00:00):
You know, again, we knew about fires. We know

(00:02):
wildfires, but what happened toLA was the most unique wildfire
we've ever seen. I was there. Iexperienced your experience, and
insurance said, Wow, we neverseen anything like that. The
wind blew it everything. And allof a sudden, now the shirt
insurance companies going backthere and saying, We never seen
this before. How do we preparefor how we charge for

Announcer (00:22):
it. HOA Insights is brought to you by five companies
that care about board members,association, insights and
marketplace, association,reserves, community financials,
Hoa invest and Kevin DavisInsurance Services. You'll find
links to their websites andsocial media in the show notes.

Robert Nordlund (00:38):
Hi, I'm Robert Nordlund of association
reserves, and I'm

Kevin Davis of Kevin Davis Insurance Services.
And this is HOA insights. Wepromote common sense for

common areas.
Well, welcome to episode number107, where we're again speaking
with insurance expert andregular co host, Kevin Davis, to
make sure you have all the rightinformation at the right time to
make the right decisions for thefuture of your association.
Every week, we want yourassociation to benefit from the
stories, the insights and theanswers we're able to share
here, and this helps you ourpodcast audience to be well

(01:08):
informed and to be well preparedfor the challenging work you do
leading your association. Sotoday, we're going to try to hit
the nail right on the head andtalk about high insurance costs
and what you can do about it atyour association, we talk about
a lot of different topics hereon HOA insights, but this may be
one of the more consequentialones. So glad you joined us here

(01:30):
today. Last week's episodenumber 106 featured a great
interview with Florida attorneyRob Webb, who shared many
insights from his years servingand guiding boards, and some
things residential boards canlearn from his primary vacation
ownership client base. Now, ifyou missed that episode or any

(01:50):
other prior episode, take amoment after today's program to
listen from our podcast website,Hoa insights.org, or watch on
our YouTube channel, but betteryet, subscribe from any of the
major podcast platforms so youdon't miss any future episodes,
and those of you watching onYouTube, I'll grab it here. Can
see the HOA insights mug that Igot from our merch store, which

(02:15):
you can browse through from ourHoa insights.org website or the
link in the show notes. We havesome great free stuff there.
It's not all for sale stuff, butthe free stuff is like the board
member zoom backgrounds. And wedo have some specialty items for
sale, like the mug. So go to themerch store, download a free

(02:35):
zoom background for your nextboard meeting, and then take a
moment look around, find the mugyou'd like, and if you're the
10th person to email me atpodcast at reserves ii.com
mentioning episode 107, muggiveaway, and we'll ship that
mug to you free of charge. Well,we enjoy hearing from you
responding to the issues thatyou're facing at your

(02:58):
association. So if you have ahot topic, a crazy story or a
question you'd like us toaddress, you can always contact
us at 805-203-3130, or email usat podcast@reservestudy.com and
today's episode comes from aquestion submitted by Jody from
Chicago, Who asked, with risinginsurance rates, we've increased

(03:20):
our dues in January, but we'rethinking about doing it again
before next year. Are otherassociations doing that? And
again, it's great to have Kevinhere to address that exact
question. So Kevin, welcome.
What are we talking about here?

It's excellent question, and there's two
answers to it, okay? Is theanswer today, in terms of what
we see right now, was all goingto change in the next three
months. Okay, so how are yougoing to tackle this answer? You
want to talk about the future.
We'll talk about today. Let'stalk about today. Today, if you
have an insurance policy, onething that's happened is that

(04:00):
we've reached stability. Okay?
Stability. That means, finally,the insurance carriers are out
there saying, You know what, wethink we can see the light at
the end of the tunnel. Soinstead of seeing 30 40% rate
increases, we expect to seearound 10% that means anywhere
between eight and 12%

that means that, yeah, the premiums have
caught up to the losses. So ainsurance companies are finally
like, Okay, we're back inbalance something like

that. Yes, exactly.
So what happens when thathappens is that you get more
capacity comes in, becausepeople are saying, guess what?
Now there's money to be made ininsurance. So guess what? We
feel pretty good. That is as ofsince January and the first
three months of the year. And itcould be tomorrow and the next
day, the next day and the nextday. Everything changes once

(04:50):
that first quarter numbers getto the insurance carriers, and
they're looking at it right now,right now, every insurance
provider is looking at. At theirfirst three months and going, oh
my god, oh my god, oh my god, ohmy god,

oh my god, good things are back to normal, or oh
my god. Things are awful.

Things are awful.
Oh, gee. So right now, if youhave to have an insurance
policy, you may get lucky to bein that eight to 12% range. So
about average, about 10% buttoday, because the first quarter
is over, January, February,March are over, and right now
it's April, and insurancecarriers are looking at their
first quarter results, andthey're they are panicking right

(05:30):
now. They are very, extremelyfearful of what they're seeing.

So we are recording this in April. I think
this episode will drop in May orJune, so things will even
change. But Kevin, I gotta tellyou, things have been crazy this
year. Usually it takes Congresssome time to make changes, but
we've had a lot of presidentialtariffs, here, tariffs, there,
that kind of stuff. So there'sbeen a lot of instability. But
first few months of the year,actually, I think of insurance

(05:58):
problems as being hurricanedamage, things like that.

And, yeah, what happened? What happened?
January? Oh, gee, wildfires.

Oh, gee, yeah, okay, right. Sorry. I'm
embarrassed. I live in us. Weboth live in Los Angeles metro
area, and Kevin and I knowpeople who lost their homes, all
right? So the losses have goneup, and the insurance companies
are back to being nervous. Yes,

they're what they're seeing is things that
are traumatic, okay? And again,what do we see? You mentioned
two of them, right off the bat,the terrorists. The terrorists
have said, What to us he had allthose that fire damaged homes in
Palisades, where our friend liveat, where David and Sandra live,
that right right now they haveto rebuild. They get lumber

(06:49):
where, getting lumber from, fromCanada, all the refrigerators,
you know, air conditioning, andget all the things that, guess
where it's going to come from,from China, you know. So guess
what the cost right now torebuild Southern California is
so astronomical that we can'teven figure out what it is right
now. So the cost to rebuild soright now, the number one

(07:10):
problem that we're facing thatwe didn't face before we talked
three or four months ago. Andright now, every insurance is
saying what's happening rightnow in terms of the tariff, and
terms of rebuilding, repair andreplacing all of that damage
that was done, that caused bythe fire, is now we don't even

(07:30):
know how much it's going tocost, and it could change from
week to week. It could changefrom week to week, but we know
right now it's not going to goit's not it's impacting
everything, and we know there'sterror is going to be out there.
And we know the ones from Chinais that's where we're getting
most of them are things, ourrefrigerator sites, all of our
units, everything's coming outof there, but just the wood, all

(07:51):
the wood is out of Canada. Youknow, just when you pay, just
everything that we need to to aninsurance provider, when we have
a fire, when everything happens,we got to replace property.
Guess what? We don't buildanything, you know, without go
out and get hammers. Weeverything gets important. The
tariffs alone has is going tocreate. And that's the number

(08:13):
one area right now where everyinsurance provider carrier
saying, Oh my god. How are wegoing to deal with them. So
right now, everybody's it's notyou don't have enough insurance
to pay for it.

You got me thinking about my house here, my
wife and I were going to build aoutdoor workbench. And she
brought that point up. You know,how much is this lumber going to
cost? And for outdoor workbench,I figured 100 bucks. And she
said, Well, figure probably 150because of tariffs. Now, 100 250
no big deal. It's still an allday Saturday project. But for a

(08:48):
house, for air conditioners,yeah, for refrigerators, for
roofing, you got me, you got me,wringing my hands here. And

one more thing about insurance, okay, is that
you have what's called, like aninflation guard, where they
allow you to go over, but wedon't know how much that's going
to even go over. If the tariffsstay at 150% or 100 whatever
it's going to be. We justinsurance right now, sitting in
a room saying how much it costsus to repair, replace property,

(09:18):
and we don't know.

And you guys, this apprentice is what
underwriters do for theirliving. The way we do for

a living is we predict how much it gonna cost
to repair, and what we do, wecharge you for it. We say it
will cost you $1,000 a year,because if your place burns
down, we have any kind of damagethat repair, replacement costs x
number of dollars. Now of asudden, oh, guess what, we
charge you $1,000 but guesswhat, it's gonna cost us, you
know, 50% more than it did lastyear. So now all of a sudden,

(09:48):
there has to be a rate gonnahave to increase, just because
of the tariffs, just because ofthe tariffs alone, rates gonna
increase.

You got me, uh, running out of words, but you're
right. Uh. Um, I think a lot ofour listeners have been I think
it's accurate to say blaming theinsurance companies, thinking
that they are taking a lot ofmoney, that they're greedy, all
that kind of stuff. But I amfeeling sympathetic to the

(10:17):
insurance companies, becausethey are taking a beating.
They're taking losses, andthey're trying to survive. And
as a business owner, I know whatmy my cost of materials in my
business is, employee salaries,but to be able to it be to be in
a business where you wonder,what is your cost, and you go up

(10:39):
and down with a presidentialsignature, 50% that's scary.

They don't realize that how much we get impacted.
So now suddenly, the tariffs,one area that one happened in
just a couple of weeks ago, hasall the insurance executives
sitting right now saying, whatdo we do? I mean, we thought we
had a point in time where we hadcontrol over the things that
caused us losses. Now suddenly,because of the tariffs, all of a

(11:07):
sudden, we have a biggerproblem, because we can't
predict. We can't predict again,when this thing comes up in, you
know, may say about 60th andwhenever our this presentation
comes up, yeah, we will know alittle bit more than we do right
now. Right now, we don't know.
We just don't know.

But I can see some executives sitting in rooms
somewhere, conference rooms,saying, Hey Joe, hey Susie, hey
Phyllis, Hey Fred, what's yourbest guess? And I can see them
just raising their hands up andsaying, We don't know. We just
know that we're taking a beatingbecause of all the losses and
because of the higher costs.
Okay? So, yeah, we know that. Weknow the costs are uncertain and

(11:45):
they're going up, perhaps scaryup. We've been talking about
property insurance. Let's focusthis a little bit. Are we
talking I know you're a DNOinsurance kind of guy, but you
have your pulse on all ofinsurance. What are we talking
about here?

Okay, good, glad you said that, because this is
the question here. There's twoissues right now. Property
losses is the tariff liabilitylosses is something that is
something we have not seen, butwe're seeing a lot of okay now,
when we have a liability lossand that okay for the director's
loss, or you get an autoaccident, or you have slip and

(12:24):
fall, no matter what it is, oryou're sued by your people who
live there because you're aboard member. Now, of a sudden,
you go to a trial, and nowthere's a jury award to you.
Now, historically, a milliondollar judgment is a lot of
money, okay? Million Dollar.
What happened over the past 10years? We had something called
the nuclear verdict. These areanything over $10 billion the

(12:46):
nuclear verdict, okay? Today,today, we have something called
thermal nuclear. Verdict, you're

inventing new words and

new words that's anything over $100 million and
guess what? That's anything from$100 million but we're actually
seeing a handful of billiondollar claims, awards and
judgments, okay, a handful ofthem in the past couple of
years. That's on top of so nowwe're talking about these
executives sitting in a room nowand saying, We got a problem

(13:17):
here. We had this major fire inSouthern California, which is
270 $5 billion economic losses.
That's some last I looked it upbefore you know, we got out our
costs with economic losses rightnow. 270 5 billion. That's not
insurable loss. That's how much,if you total everything, the car
everything, that's total losses.

(13:38):
This is businesses. So you'retalking about 270 5 billion
nothing, nothing's compared tothat right now. So you're
looking at 270 $5 billion yougotta look at now to use a
tariff based system to repairand replace the things out there
and rebuild. Okay, so for this,from a property point of view,
that's that's driving insurerscrazy. Now you open up another

(14:02):
door, which is having somethingcalled thermal nuclear verdicts,
a word I just heard of about twomonths ago. These are verdicts
that insurers or insurancecompanies are worried about,
because we're seeing things over$100 million and then we saw our
first over the past couple ofyears. We have a handful of

(14:24):
billion dollar losses. And oneof those Monsanto, you have the
Johnson Johnson, the baby powderthing, right? Yeah. I mean,
those ones that we know aboutthat as insurance. I'm worried
about billion dollar losses,$100 million losses. What I'm
worried about is a $10 millionloss becoming normal, where $20
million loss coming normal,where historically, a $1 million

(14:47):
loss was a big loss. Yourinsurance was a million dollar
per loss per year. That's whateverybody that was a standard.
You know, forever long as I'vebeen in insurance, million
dollar loss, million dollar.
Annual aggregate. That's what itwas. And then your homeowners
policy, yeah, $100,000 or$200,000 we're talking about
numbers that we can't evenunderstand from an insurance

I started writing it down, and I take
notes during our conversationhere to try to stay on track,
and I lost track of the zeros onthe 270 5 billion, so I just
wrote down B, I'll look that uplater. That's just crazy. And it
was 1200 homes, 1500 homes,something like that. Yeah. And

(15:33):
here in Los Angeles, that wasgreat. And we have an Olympics
in a couple years, couple years,in 2020, years. Yeah, I'm glad
I'm not mayor of Los Angeles.
It's

so many things happening right now from again,
this just, this is, this is thepast three months. Okay, you
know, again, we knew aboutfires. We know wildfires, but
what happened to LA was the mostunique wildfire we've ever seen.
I was there. I experienced yourexperience, and insurance said,
Wow, we never seen anything likethat. The wind blew it
everything. And all of a suddennow the shirt insurance

(16:07):
companies going back there andsaying, We never seen this
before. How do we prepare forhow we charge for

it? The wind was right. The weather was
right. A reservoir was emptybecause it was being repaired.
Yep, just a lot of individualcircumstances that came together
for something really bad. So wehave verdicts are getting higher
on the liability side. We havesituations where we have homes

(16:35):
in reasonable areas, well, Iguess they're next to open
space, and so that makes them atrisk for fire damage. But there
are circumstances that can makethem burn. We know what's
happening. What does anassociation? Is there any
alternative to an associationjust stopping and like, who was

(16:56):
it in the question here today?
Jody from Chicago said, risinginsurance rates okay in their
board meeting, are they facedwith the fact that they just
need to look at each other intheir conference room and say,
you know, folks, we need to goup again from 550 a month to,
who guesses 606 50 to be able topay for insurance? How do they?

(17:18):
How do they deal with this?
That's the

best thing right now. What my goal today is say
everybody was listening. Beaware this happened in the past
three months, six months ago,four months ago, we talked about
this year, and we thought wehave a stable year, stable very,
very stable year. We thoughtthat the rates were and claims
and again, guess what? We haddisaster of last year. We had a

(17:43):
lot of disasters last year. Andwhat we said, Okay, we got it
now we can figure it out. WeOkay, and we're talking about
stability now. Now we'rereaching uncertainty and
instability, which create fearin insurance companies. So that
means is that we don't know whatwe're going to see in another
three months by, by the summer,we don't know what's gonna look
like. So my suggestion, off thebat is you have to be prepared.

(18:08):
Board members, you have to beprepared. You have to say, You
know what we are. Have to budgetfor the rate insurance rates
gonna go up more. Okay? I wouldsay right now, if you go for 15%
rate, you'd probably be prettysafe, until we get the message
that, guess what, that's notenough, okay? Because the tariff

(18:30):
may come down, okay? They mayend up only paying you know, you
have 270 $5 billion in that fireloss, but we don't know how much
of that is insurable, okay?
Because a lot of it, what yougot is not uninsurable. Okay, so
we'll know more in anothercouple of months where I go,
guess what? A lot of that wasn'tinsurable. The tariffs, not that
bad. So we're going back to whatwe felt before. And you know,

(18:52):
liability can change. In otherwords, those big claims, what
can happen? You can get a jurypool that comes in and go, No,
especially our society. Oursociety is changing. Where are
we going to still award thesebig juries? Do we? You know
what's going to happen, andthings can change rapidly. In
three months, where in June,it'll be, everything be okay?

(19:14):
You know? Because we know that.
You know, every day to day,things change, but by June, we
can, we all, all can be over,and we can say, Guess what, we
survived the past three months,the second quarter, and the
claims weren't that big. That'swhat we thought it would be. The
tariffs wasn't that big. Andguess what, there's been no more

(19:35):
billion dollar awards, or $100million awards. They drop back,
if that happens. Guess what? Nowwe're talking about going back
to a stable certainty market,where we're looking at it, we're
feeling like, okay, there'scertainty in here. And we can go
back to, you know, maybe a 10%round average, around 10% based
on where you live. However, itgoes back to the one simple

(19:56):
thing you got to be aware andlook and see. Right now,
insurance companies are notmaking money. You know, they
understand what they need to do,but it is challenging right now
because of what they're seeingout there. It's different. It's
really different than we've everseen before.

Kevin, twice a week the dry cleaners pick up
from my house, and I just knowthat if you know they use some
kind of chemical in dry cleaningour shirts and then pressing our
shirts, that kind of stuff, iftheir chemical costs go up, then
my dry cleaning costs are goingto go up. That's just the way it
is. Yeah, and for the for you tosay the insurance companies are

(20:37):
taking losses now, that's justlike the dry cleaners saying,
Hey, Mr. Nordlund, the yourshirt used to be, I don't even
know what it is. Fortunately, itused to be 10 bucks a shirt. Now
it's going to be 12 or 15. Whatam I going to say? Yeah, I'm
Yeah, I still need, I still needmy shirt strike clean. So there,
yeah, there are costs, butthere's

one thing you can do. We talk about things you can
do about it is and you'retalking about that's a really
good example of your drycleaner. You can make decisions
and say, Okay, now maybe I cango once a week instead of twice
a week. Okay. Now, so the samething with the insurance side.
You know, this is the time youneed to sit down with insurance
person, your agent, a broker,and say, look at this and see

(21:19):
where can I save money. What canI do to make this thing more
less expensive than it is rightnow? Do you have to take
ownership of your insurancepolicy? That's the one thing you
got to do. I think

we set the table here in the first half.
Let's take a quick break to hearfrom one of our generous
sponsors, after which we'll beback to hear more common sense,
for common areas, to hear aboutwhat you can do and what control
you have at your association.
Hi, I'm

Kevin Davis, the president of Kevin Davis
Insurance Services. Ourexperienced team of underwriters
will help you when you get thatdeclination. We provide the
voice of reason, someone whowill stand by you. Our
underwriters are bringing yearsof knowledge to our clients that
can't be automated by technologyor driven by price. As a proud
and wins company, we bring truevalue to your community

(22:09):
association clients. We are yourcommunity association insurance
experts,

and we're back.
Okay? It was a pretty soberingfirst half of this program. I
know costs are going up. It wasscary to hear that there's so
much uncertainty. But Kevin, Iwant to stand on firm ground you
talked about. I can at leastchoose how many times I'm going
to have my shirts dry cleaned. Ican choose how often the pool

(22:36):
service comes and services arepooled per week, things like
that. What control do boardmembers have over their
insurance premiums? I

would say there's a four step process they have to
take. Okay? Step number one isbe aware of what's happening out
there. Okay, leave your eyesopen and say, Okay, I understand
right now, insurance, it's toughout there. It costs a lot of
money to repay. Every place, itcosts a lot of money to defend,
and if it's a judgment, so we Iget it now, so now that we will

(23:13):
wear second thing we need to dois get an insurance professional
there and say, Let's go throughthe insurance policy, okay,
where? What am I missing? Whatcan I alleviate? And so you
really can understand whatyou're buying out there. Okay,
so

if you don't have a pool, you don't need
drowning insurance. If you don'thave waterfront, you don't need
something to do with dock orrising sea levels or something
like that. Is that what you'retalking or

what you could do something more so is that I'm
gonna put a higher deductible ofcertain things? Okay, so you're
looking at it, so all of asudden you say, well, listen, we
have a lot of water problemsright now. But guess what? We
have a system now in place,which shows me if there's water
leakage, if this So, guess what?
To save money, I want to go fora higher deductible on water
damage claims. I want to look atwhat I have, what I'm insuring,

(24:07):
because what Ed understand thatthere's insurance and there's
maintenance, because the firstcall I get normally is that my
roof is leaking, put in a claim,okay? And you go, Wait a minute.
Why is your roof leaking? Youknow, it because of an
occurrence or because of wearand tear. And guess what?

(24:28):
Because it's

a 20 or 25 year old roof. Exactly, dummy, yeah,
exactly. I said that actually,

sarcastically, but, but it's true, though. That's
true, and that's the problem.
What happens is that, if youdon't understand what your
insurance provides coverage for,and you call up your insurance
person and put a claim in forsomething that's not a covered
loss, they guess a check marknext to your name, okay. Check
marks. Okay. You know,understand the difference
between what. You have tomaintain, and what you have to

(25:00):
ensure. And that's when you'resitting now insurance
professional and saying, Okay,we want to make sure we're
insured things that we shouldensure from that is an accident,
something occurring that thatwe're not prepared for a non
maintenance issue. And sometimeswhat they do, the condo boards
look at it as because wemaintain it, we have to insure

(25:20):
it for maintenance issues, andthat's where the problem comes
into play, because now you startseeing maintenance issues
claims, and that's why yourrates go up. Once you understand
your insurance in terms ofmaintaining versus insurance now
the sun, it goes back to thatawareness. Now I'm aware so that
I'm not putting claims out therethat should not be covered.

Now you're feeding into my narrative. I
like seeing my clients takinggood care of their property, a
property well cared for. They'regoing to have, and I'm using
round numbers 20 years, wheretheir roof serves them well.
They're going to have the ironwork fence around the pool be
stable and sturdy, and so littleJohnny is not going to be

(26:05):
running and slip and fall andbang into the iron work and hurt
themselves, because something isthere and it's stable and it's
not breaking and cracking, or abalcony railing, things and or
maybe a gate that's supposed tokeep people in or keep people
out, staying on top ofmaintenance prevents higher
costs of deferred maintenanceand prevents people, boards,

(26:28):
homeowners, from calling theirinsurance agent when they really
should have fixed it for 100 or500 bucks. Let me add

one more part to it is that now the sudden, because
you haven't fixed it, semi tripsand falls, those are my drowns.
And now we go to the liabilityside, where somebody say, okay,
because that person drowned, Iwant 20, $30 million I suppose,
historically, and maybe a one or$2 million drowning. So what
you're going to do is say, well,guess what? We did our job. We

(26:55):
maintained the property enough,so now we have a defensible
position. And that's the key, ifyou maintain the property, okay,
so not only you're looking at alower insurance rate, but we are
sued because there's trip andfall or drowning, you say, Wait
a minute. We maintain ourproperty as outlined in the
governing documents or in ourmaintenance plan.

And the jury hearing that will say, Well,
gee, the Board did everythingthey can and everything,
everything they could,everything they should have. And
so the person is asking for 10million. Obviously they drowned,
but we'll give them 1 million,not the $10 million

verdict, exactly, or because you didn't do it the
right way. Now that 10 milliongoes to $100 million was now
sudden, you did something soegregious you knew the gate was
not there. Well, with that fixedproperty didn't close properly.
So now, so you're talking abouta major loss right there,
because there's a record. We'retalking about two areas now,
yeah, we're talking about theproperty in terms of maintaining

(27:51):
the property, so that, you know,it looks nice, and you maintain
it, because it's your job, butit's like, it's hurt. The
difference between being acouple of million dollars
versus, you know,

a lot of millions of dollars. Yeah, you
don't want a line item in themeeting notes saying that we
didn't fix that gate because itwas going to be $100 yeah, don't
want to be cheap. And someonewill say, for 100 bucks, my
little boy drowned. That is,yeah, it's a bad luck. Okay.
Hey, help me stay on track.
Here, you said you had fourthings. Number one was, don't be

(28:22):
surprised. Number two,

talk about the insurance person and learn to
understand it getsunderstanding. Third thing is
budget. Budget for it. Okay? Theone thing that community
association can do that we can'tdo, right? When something
virtually happens to us, guesswhat we gotta do? We got to do?
We have to go to bank, getloans. Commissioners can budget
and say, Guess what? We knowthis is the cost of next year.

(28:47):
We want to budget for it today.
Get the money up front, youknow, and budget. So just really
budget by talking to theinsurance professional and
saying, What do you think isgoing to happen? Okay, right
now, we're not sure, but 10% isokay. But in three months from
now, call me again and we'll letyou know a little bit more.

I'm gonna say Quarterly Review. Is that fair?
Well,

I would not say, because depends on when
insurance policy comes up. Youknow, you gotta prepare if your
short insurance probably comesup later on this year, I would
say, talk to your insurance. Youknow, about 30 days, 90 days
before it comes out. Sit down,because, guess what? It's going
to change. Right now, everythingcan change in 90 days. You know,

(29:32):
things a lot different. 90 daysfor your insurance. Sit down
with your insurance professionaland say, What do you think? What
do I have? Yeah, how can I savemoney? I don't want to limit
coverage. For certain coverage,I can limit, you know, do you
really need a massive umbrellapolicy? You know, some, some of
the association has $100 millionumbrella policy. Do you need

(29:52):
one? Well, I hate to say youdon't need one, but if you're
doing the job, you'remaintaining it properly, maybe
you can say I don't need a. Bereally high limit on my umbrella
policy. Maybe I need a $5million because we are focusing
on maintaining my association,that we have the kind of issue
that the association across thestreet has,

that's a situation where spending money
saves money. Say you are runninga tight ship there at your
association, then all of asudden some of these other costs
go away or get reduced. I'm alsothinking that just as those
insurance executives were inthose board meetings unsure
about what was going to go onand so they have to hedge up.

(30:34):
Julie adamant talks so muchabout communication and how you
can't do it enough again. I'mnot sure exactly when this
episode will drop, but it willbe May or June, and it may be
early enough, or even whereverit falls in your budget year, it
may be time to add a note inyour communication with the

(30:55):
homeowners that, hey, insurancecontinues to go up. Expect an
increase next year. Alert them,let them. Don't drop it on them
at the last minute, but start toprepare. Prepare the soil. Is
that fair? And

it's number four.
You just name that forcommunication with number four.
Okay, once you get theinformation, once you become
aware, you have to communicateto the people. You have to let
them know what's going on andwhy. What we don't do enough of
is say, why? What we do is saythose insurance people are the
bad guys. They're ripping usoff. I can't believe they're
doing it. Okay. You got to say,Listen, this is what we heard.

(31:31):
This is what we see to repair,replace. Anything is more
expensive than it ever has beenbefore. Now, let me go to
tariffs, but inflation andeverything. It's just cost.
Everything costs more money in aday to have before that's the
reason why rates are going up.
Another reason why, becausethere's something out there,
these verdicts that we see aboutall the time. Hey, you know the

(31:53):
number of lawyers that are outthere now since COVID? You know,
we looked at the numbers ofpeople who went to college
during COVID and got a lawdegree, and there's so many
lawyers out there right now, andso many things happen on that
law side that are reallyfocusing in on those, what I
call thermonuclear verdicts,because guess what, if you have

(32:13):
$100 million verdict, guesswhat? You have a lot of happy
lawyers there. Communication isthe key. You have to let people
know what's going on. All

right, so there are things you can do to get on
the good side of the equation.
Take good care of your place.
Have clean records show thatyou're doing what you can
communicate all those kinds ofthings. And yeah, like you say,
maybe things will settle downeconomically. Maybe the verdicts

(32:46):
will settle down with peopleappreciating that, gee, the
association doing the rightthing, and the person at fault
had some fraction ofresponsibility. So what I'm
hearing is there's no magic.
It's almost like doing commonsense things exactly,

and that's okay.
Guess what? At the end of theday, you know you can't decide.
You can't put your building upand live in an area where
there's no fires. If there'sfires, there's fires or
earthquakes or floods orwhatever, this you can't do
anything about that. If you havea 30 year old building and roof
is all. You know what? You got30 old building, and you can't
do anything about that. Youknow, the roof is old, but it's
the one thing. Only thing youcan do is maintain your

(33:26):
association. Just that's it. Ifyou maintain the association, is
the one area of control over.
You can't control anything elsearound there, but you can
maintain it. And if you focus onmaintaining your association,
guess what's going to happen?
Your insurance person, yourinsurance agent, will look at
your place and go, You knowwhat? Let's try to get you a

(33:47):
better deal. Because you'refocused in on things that are
important, the things that arereally matter you can't control.
Yes, you live in a fire zone.
You know? It's interesting. Whathappened is, there's a fire zone
in California, right? Well,guess what that fire zone is
spread. We need to wear a notfire zone now map, because it is
just spreading and spreading andspreading to the point where

(34:09):
it's like, what is it a firezone? It's a fire zone. So,
yeah, California is it's gonnabe hard. It's gonna be tough.
You live in California,especially southern California,
because of that fire really ischallenging. However, it may not
branch out to other areas andmay not branch out into areas
where there are no fires. Wedon't know. We'll know again. I

(34:31):
guess we'll come back again inthree months, Robert and we'll
do an update and say, Guess thisis where we at right now. I
guess we're gonna have to dothat. We will learn more in
three months. Number one, youand

I do this regularly at work, so we're
going to be back and the we knowthe situation is going to
change, and we'll provide youour audience with the latest
information. So Kevin, it'salways great talking with you
this timely conversation. And.
Any closing thoughts to add atthis time, maintain,

maintain, maintain and awareness. You got to be
aware. And when you explain, youexplain why, why are the rates
going up? And you got to say thereason why? Because the repair
or replace has costs more moneythan ever before, not only we
talking about inflation,tariffs, all that stuff that,
yeah, the sheriff executivesright now, or and conference

(35:25):
calls saying, what do we do? Andwe don't know. We don't know
right

now. You know the way you've explained it
here. I think your homeownerswill understand that with the
uncertainties with the wildfiresin Los Angeles, the tornadoes
that will happen, the ice stormsthat will happen. Everything is
expensive. And taking good careof your place and communicating
clearly to your homeowners. Thisthe cost of living in an

(35:52):
association nowadays, it's goingto be the same whether you're in
our association or anotherAssociation, or you have your
own single family homesomewhere. So it just is a
rising cost out there to ouraudience. We hope you learn some
HOA insights from our discussiontoday that helps you bring
common sense to your commonareas. That communication tool

(36:13):
we hope you've given, given yousome real talking points. So
thank you for joining us today.
We look forward to bringing manymore episodes to you, week after
week after week, we will behere, and it'll be great to have
you join us on a regular basis.
Spread the word

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107 | Wildfires, Verdicts, and Tariffs: Why Your HOA Insurance Costs Keep Going Up

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}107 | Wildfires, Verdicts, and Tariffs: Why Your HOA Insurance Costs Keep Going Up